One of the best managed and reputed company in the FMCG sector. The vast network and advertisement of its products the company hold handsome share in the retail sector. The company doesn't need any introduction as it is well known for its stability and goodwill through out the country and abroad. The company was named as Hindustan Lever which has been changed recently to Hindustan Unilever Ltd.
About The Results
HUL’s net sales growth of 16.8% for the December quarter is due to a respectable 20.8% in the home and personal care business and 23.8% in foods. But this growth was offset by the slowdown in soaps and detergents. This clearly means that if the company hopes to sustain growth, it needs to reduce prices or else, in this era of slowdown, people will shift to cheaper brands.
YoY investment behind brands continues at 10.1% of turnover, growing at 16%. Spends during the quarter remained competitive, although marginally lower by 1.3% over DQ’07. It posted a 13% rise in PAT before exceptional items grows by 13%. But after exceptional items, PAT was flat with a rise of just 1% at Rs.615.74 crore. This was also due to the higher exceptional gain of Rs.77.45 crore it had in Q3FY08. But QoQ, PAT was higher by 13%.
In the coming months, softening commodity prices augurs well for the business. But given the slowdown, it will have to pass on the benefit of these lower costs to the consumers by lowering its prices. So the net effect might be nil. Volumes will go up but lower realizations will keep the margins flat.
The stock is not much volatile due to which any vast fluctuation is not noticed neither in Bull run nor in Bear phase. But for safe investment it could be accumulated on every dip. The long term story remain intact.
Disclaimer: I do not have any personal holding in this stock.